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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (92219)	9/16/2001 10:57:58 AM
From: Don Lloyd	Respond to of 132070

Wayne - ...money should come into the system at around the same rate as economic activity grows. The term "economic activity" is a tough one for me to define and measure though.... It cannot be measured, and certainly not well enough to serve as an error signal for a futile attempt to control the money supply. In any case, it is not necessary, as the fluctuations in the purchasing power of money ( also not measurable ), which is the only thing that matters, are in large part self-regulating as more or less money is exchanged for a given quantity of goods and services. When the demand for money temporarily increases faster than supply, its purchasing power increases and cash balances will tend to be spent down as the desire to hold cash is really a desire to hold purchasing power, not a particular amount of money. This results in a downward restoring force that partially offsets the initial increase in purchasing power. From M. N. Rothbard, Man, Economy, and State, Vol. II, page 670 - "...whatever the social money stock, the benefits of money are always utilized to the maximum extent. An increase in the supply of money confers no social benefit whatever; it simply benefits some at the expense of others ... For money is used only in exchange, and an increase in the money stock simply dilutes the purchasing power of each monetary unit." Regards, Don